Recession Impairing Ability of State and Local Governments To Adjust Retireee Health Liabilities

The Center for State and Local Government Excellence has released an issue brief finding that the U.S. economy has slowed the ability of local governments to address long-term funding of their retiree health care obligations. "How Local Governments are Addressing Retiree Health Care Funding" looks at 206 jurisdictions that were had reported in 2009 that they were likely to adopt a long-term strategy to strengthen their retiree health care funding.

According to the new brief, while the economy, insufficient revenues, and competing budget priorities have posed significant impediment to their plans, many jurisdictions are making sweeping changes in their retiree health care plans. Specifically, the brief reports that:

• 36% of the jurisdictions have increased or plan to increase the years of service required to vest.
• 11% have increased the retirement age.
• 39% have eliminated or plan to eliminate retiree health benefits for new hires.

Source: Center for State and Local Government Excellence News Release (August 5, 2010)